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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Rashley who wrote (2879)	2/12/1998 9:14:00 PM
From: Pancho Villa	Read Replies (1) \| Respond to of 18691

>>I've had this in the back of my mind since Pancho's terrific illustration of WDRY 2 months ago. I'm going to wait for a couple more weeks before shorting...<< Rashley: Thanks for the compliment. IMO it is difficult to say when to jump in. If the selling [both longs holding and shorts selling what they don't have] gets heavy there will be no shoe [green or any other color] that will stop this puppy from a free fall. I started to accumulate about a week ago at around 28+. Conditions are complex. Some people think this market may hold/keep climbing until at least mid-march, but then again it may fall 10+% next week. Can't tell you what to do. I am considering covering my ZMAX, which I shorted at 12+ and is now at 6 and put the money behind this puppy. Pancho

To: Rashley who wrote (2879)	2/12/1998 9:17:00 PM
From: Upstater	Respond to of 18691

MSPG and ELNK have just been plowing ahead, nothing stopping them. I started tracking MSPG at 29 1/2 a few weeks ago. It hit 49 1/2 today. Amazing. Getting ready to short it and I was wondering if anyone of you have established short positions yet? or is it too premature? what are your downside targets?

To: Rashley who wrote (2879)	2/13/1998 2:45:00 AM
From: CalculatedRisk	Read Replies (1) \| Respond to of 18691

Rashley, RE: WDRY. Here is a description of the infamous Green Shoe. (For WDRY the over allotment has already expired - it was for 30 days) WDRY did a secondary offering on 12/16/97. They sold 4.0 million shares at a price of $19.75. Additionally, WDRY granted the underwriters an over allotment option on an additional 600K shares. The number of shares is almost always 15% of the offering. Here is how this really works: On 12/16/97, the underwriters sell 4.6 million shares at the offering price (usually to institutions). They give the Company the cash for the equivalent of 4.0 million shares (minus fees and expenses). What happens to the cash the underwriters receive for the final 0.6 million shares? They put it in the "green shoe"! Then during the over allotment period, if the price drops below the offering price ($19.75 in this case), the underwriter buys shares on the open market to support the price. If the price stays above the offering price, the underwriter exercises the option to cover their position. This "green shoe" provides strong support at the offering price for the option period - since there is a heavy buyer every time the price drops to the offering price. IMO, WDRY is not a great short. The only reason cash flow is negative is because of the debt. This can and probably will be fixed. Regards, Bill